I am 51 years old and would like to retire by 55. I will only have about $125,000 in retirement accounts plus another $35,000 in non-retirement accounts. I am planning to move from the US as I have a house that is fully paid off overseas. After living there for a year, I’ll get residency in the country, which includes essentially free national healthcare.
We will maintain an international health insurance plan that includes evacuation to the US for something important. My wife is older than me and will start her Social Security when we retire. Her monthly amount will be more than twice our monthly living expenses. I intend to take Social Security after age 62. Plus, we’ll have two to three years of living expenses in cash when we retire.
We will be very happy to live there with less stress etc. Are we crazy?
Connected: We are 70 years old with a chronic illness. We have $300,000 in 6 month CDs and $100,000 in cash. Are we on the right track?
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Dear Reader,
You don’t sound crazy. You actually sound pretty prepared.
You’ll both have two to three years of living expenses in cash when you retire, which will allow your investments to continue to grow over time and also hold you over in case of an emergency. It’s also positive that you’ve considered your health care needs and options, considering how expensive it can be (and how confusing it can be when you’re not in your hometown).
Many retirees choose to move abroad for a variety of reasons – a change of pace and environment, proximity to relatives, cost of living, etc. If you already have a house there, you’re in good shape.
I will mention just a few necessary tasks to keep in mind while preparing for this move.
In addition to planning how much you’ll receive in Social Security, be aware of where you’ll put that income. Retirees living abroad should carefully consider which bank they will be working with so that money is easily accessible. Social Security benefits are paid electronically through direct deposit, and retirees abroad can find an institution that has an international direct deposit agreement with the U.S., according to USA.gov. Here is a list of the countries and territories that accept these direct deposits.
Just make sure you check with the Social Security Administration from time to time. The agency will send out questionnaires every year or two to determine if you qualify, according to USA.gov, and if you don’t answer, they may stop benefits.
As for your investment accounts, it may be easier if you keep a US address on file. If that’s not possible, talk to the financial institutions where your retirement and non-retirement investment accounts are held to find out what you might need to do to avoid any problems with withdrawals and taxation.
See also: “We stay in two-star hotels”: We’re 70 years old and have $1.8 million, but my husband insists we live cheaply. Don’t we have enough?
Keeping your US-based finances in order can be to your advantage, including maintaining your US credit cards, according to Kathleen Peddicord and Leif Simon, authors of Live and Invest Abroad. Peddicord and Simon write extensively about retirement and living abroad on their site. Opening a credit card abroad can be complicated, they say, and may come with lower limits than you’re used to in the U.S.
Some countries have residency requirements, such as having to invest a minimum amount of money, have a certain amount of savings, or find a job to stay in the country. Your home may be the investment you need to acquire that residency, but it’s also important to understand the renewal rules, if any, so you don’t end up with a headache a year or two after the move.
Since you have time between now and when you intend to retire, try living there from time to time over the next few years. Take trips during the off-season and when you’re there, visit places that only locals would go, including grocery stores, pharmacies, maybe even a medical facility or dentist’s office. If you haven’t already, try to form some relationships with people who live nearby so that you have a small community to rely on when you live there full time. The ideal scenario is to feel completely comfortable and at home until you finally pack your bags for good.
Readers: Do you have suggestions for this reader? Add them in the comments below.
Have a question about your own retirement savings? Email us at [email protected]
